Most Vermonters support a second home tax. In a recent Vermont Public Poll, 57% said the state should impose a new tax on second homes. Twenty-eight percent disagreed, and 15% weren't sure. (A UNH poll found 78% support, but its question was worded more broadly.)
The poll didn't define "second home" or ask respondents whether they own one. Many probably pictured an empty slopeside condo owned by a family from Connecticut, and much of the public debate has pointed that way. But the reality of trying to define a "second home" is more complex. So let's test our assumptions.
Vermont taxes primary homes at the "homestead" rate. Everything else, including unoccupied land, camps, and second homes, pays the "non-homestead" rate. Act 73 of 2025 and Act 170 of 2026 created a separate second home (aka residential non-homestead) category, but no rate has been set yet, and it won't take effect before July 1, 2029.
1. Can Vermont tax only out-of-state owners?
Probably not. In Camps Newfound/Owatonna v. Town of Harrison (1997), the U.S. Supreme Court struck down a Maine property tax rule that favored in-state interests. The Court held that the dormant Commerce Clause, which bars states from discriminating against interstate commerce, applies to property taxes.
An even broader definition of this is being tested in Rhode Island right now. On August 19, more than 50 plaintiffs sued over the state's new surcharge on non-primary homes worth more than $1 million, even though the tax applies to residents and nonresidents alike. Their complaint leans on the argument that it implicitly targets out-of-state taxpayers, rather than explicitly targeting them. The sponsor of the original bill largely confirmed this during hearings, explaining that because many of the affected owners are nonresidents, "none of these people can vote against me."
Any Vermont tax would have to apply to Vermonters' second properties too. And pitching it as a way to make "out-of-staters pay" could weaken it in court.
2. How many second homes do out-of-staters own?
No one knows for certain. Estimates of how many second homes could be taxed range from about 35,500 to 70,000.
Vermont Housing Finance Agency (VHFA) data shows that 13% of all habitable properties are held by out-of-state owners, and 6% are held by Vermonters who live in another town. A full 83% of all year-round residential properties are owned by Vermonters who live in the same town as the property. The number of out of state or corporate owners is strikingly low for these types of properties. However, if we narrow the focus to just seasonal homes, the numbers jump to 48% out-of-state ownership and 35% out-of-town Vermonters respectively.
That means that over a third of seasonal properties are owned by Vermonters. This makes sense because we know that many camps and cottages have been in Vermont families for generations. These are properties that are likely not fit for year-round habitation, but they could easily be caught up in a "second home" tax depending on how that line is drawn.
3. Which properties would get caught?
"Second home" can mean a resort condo, an inherited deer camp in the Northeast Kingdom, or a family cottage on Lake Champlain. All of them would appear to be seasonal homes based on their usage. Grand Isle County is an interesting case study in this. Seasonal homes make up 38% of its housing, the second-highest share in the state. Many of these camps may already look like year-round homes on paper but their usage does not.
The dividing line, according to current legislation, is whether a property is "fit for year-round living," and the Tax Commissioner decides what that means. Even the Tax Department calls that standard "very subjective": "Is it insulation? Is it heating? Plumbing? Is it a road that's plowed?" A family camp that was winterized years ago to extend the season could now be taxed the same as a resort condo or as a fully insulated single family home used five weekends per year.
The same definition of a taxable "second home" that captures a ski condo would also likely capture many Vermont family camps. Those camps are often passed down through generations and paid off, and the family may very well not be able to purchase them today if they needed to. In other words, they couldn't actually afford the property if it hadn't been passed down to them.
4. What would it mean for Vermonters who already pay on their primary home?
Picture a Vermont family with a primary home and a paid-off camp. They already pay two tax bills, and:
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Their bills are already rising. Education property tax bills went up an average of about 3.5% this year. Having no mortgage doesn't change that.
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The camp likely already pays a higher rate. That's true in 178 of 249 towns where the statewide non-homestead rate is higher than the homestead rate.
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The camp gets no income-based relief. Vermont's income-based property tax credit (known as income sensitivity) never applies to second homes. That means the family pays the full tax rate on this property.
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The increase could be steep. At the top tax rates the state has modeled, a "second home" assessed at $500,000 would incur about $3,050 more per year.
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Relief on the primary home isn't guaranteed. Candidates have already promised to dedicate the revenue of a "second home" tax to housing, property tax relief, and health care. Such a family could not reliably count on a tax break on their primary residence to offset the increase in their secondary property.
The important bit to understand is that for these Vermonters, this isn't a tax on “someone else” the way that some have framed this argument. And, remember, over a third of the properties we are talking about are owned by Vermonters.
So, is it a good idea?
There's a real case for it. About 19.4% of Vermont homes are vacant, the second-highest rate in the country, and roughly 76% of those are seasonal. Each penny on the non-residential property tax rate would raise about $2.35 million. But that number will be less once "second home" is better defined.
It is important to clarify what our goals are and whether or not this is an effective tool for achieving those goals. The current debate has largely been framed in the context of creating incentives for housing stock to be returned to year-round service. If only a quarter of the properties we are talking about are even candidates for this, that seriously blunts the effectiveness of this tool.
It could be narrowly targeted at properties fit for year-round habitation, perhaps with a dollar value threshold in order to protect middle-class property owners. However, this would not generate a significant amount of usable revenue (although we will want to wait and see how the Rhode Island constitutional question plays out). Further, it is questionable whether year-round residents could actually afford these luxury properties.
You could insulate in-state owners by putting 100% of the revenue collected into the income sensitivity program. But this would still not make them whole, because the pool of tax credit recipients (about half of all homestead filers) is much larger than the pool of second property owners.
If the goal is new revenue, an alternative would be to (again) increase the property transfer tax, which only applies when a property is sold. This would protect the affordability of family camps while still collecting revenue on "luxury" properties, however it would also apply to units being converted from occasional to full-time use. A surcharge implemented in 2024 on "second home" purchases appears to have mixed results, indicating that this is also not a stable revenue source, so it would be difficult to budget ongoing programs around it.
The bottom line here is that the second home tax most people picture isn't one Vermont can pass. And the one it can pass would reach Vermont families too.
On behalf of Vermonters,
Pam Mackenzie
President, Campaign for Vermont
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News Worth Reading:
Our top picks of local must-read news this month.
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Recently Completed Research & Policy Proposals:
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- Education Spending & Outcomes Report - Published December 30, 2024
- A Pathway to Viable Education Reform - Published March 7, 2025
- Letter to Education Reform Conference Committee - Sent June 6, 2025
- Review of Yale Report on Effectiveness of Act 46 - Published July 22, 2025
- Letter to Act 73 Task Force - Sent August 12, 2025
- Finding Savings Through Shared Services in Vermont - Published November 10, 2025
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